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Pure Technologies Ltd. announces results for third quarter

CALGARY, Nov. 20 /CNW/ - Pure Technologies Ltd., TSX-V: PUR, announces
total revenues of $2,171,000 for the quarter ended September 30, 2007. Net
loss from continued operations for the period was $139,000. Revenues year to
date 2007 are $6,300,000, an increase of 12% over the first nine months of
2006.
The third quarter included a number of significant events for the
Company. We finalized the previously announced SoundPrint(R) AFO contract with
the Great Man-Made River ("GMRA"); we announced two other major contracts; we
announced the sale of PureTech Systems Inc., our video surveillance
subsidiary; and we started a new Oil and Gas business unit to capitalize on
the opportunities presented by our SmartBall(R) and Acoustic Fibre Optic
("AFO") technologies.
Significant impact from these events will occur in the fourth quarter as
we expect to complete a substantial portion of the GMRA equipment order. This,
combined with completion of other work in progress and the gain from the
PureTech sale, is expected to produce very favorable results for both revenue
and earnings.
We are greatly encouraged by the early response from the oil and gas
sector for SmartBall(R) and we anticipate that revenues from service contracts
and licensing should make a significant contribution to 2008 results.
Meanwhile, following a number of successful commercial pilot projects with our
water SmartBall(R) in North America, we are in the process of hiring personnel
to execute commercial contracts in North America and pilot projects and
training of licensees in international markets.
Business prospects for 2008 and beyond look strong. In addition to our
water business in North America, we see excellent growth potential in the
water and oil and gas sector internationally. We have commenced marketing
initiatives in South America, Asia and the Middle East. Current confirmed
backlog is in excess of $16.5 million and annualized monitoring and technical
revenues are currently $2.5 million.
Financial Overview
The Company entered into a definitive agreement to sell its subsidiary,
PureTech Systems Inc., in late September. The sale was closed on October 1 and
a material gain of approximately $1 million on the sale will be recognized in
the fourth quarter. The current and previous periods in the financial
statement have been restated to classify PureTech's operations as
discontinued. The analysis of results below removes the PureTech operations
from both the quarter and year to date figures.
Product sales revenue overall increased by 15% in the third quarter of
2007 compared to 2006 as the Company recognized a small portion of the GMRA
contract in this quarter. Delivery of material and assembly of the equipment
began late in the quarter as the final version of the contract was executed in
late September.
Year to date product sales revenue has increased 12% from last year,
reflecting increasing sales activity levels throughout the year. To some
extent, the strength of the Canadian dollar has reduced the apparent results
of the Company's U.S. subsidiaries through currency conversion, but actual
activity levels are significantly higher than 2006. In addition, there is an
overall positive aspect of the strength of the Canadian dollar for the
Company. Several components for our AFO systems are purchased from US
companies. The resulting effect is to lower our material costs in Canada and
hence, increase margins.
Monitoring revenue decreased over 2006 by 12%, mainly attributable to the
strength of the Canadian dollar. Encouragingly, in this quarter, two clients
with AFO installations from 2006 renewed their monitoring contracts. These
were the first major renewals from our 2006 installations and demonstrate the
customers' confidence in our technology.
Gross margins were steady in this quarter with the third quarter of 2006
at 57% and 58% respectively. On a year to date basis, the gross margin has
increased from 54% in 2006 to 65% in 2007. The third quarter results reflect a
lower margin than the year to date margin as the AFO project phases were
predominantly installation phases which tend to be the lower margin phases of
our projects.
Marketing and promotion expense for the quarter increased by 6% over the
third quarter of 2006. More resources were engaged in SmartBall(R) marketing
and expansion efforts in the energy sector. Year to date, the expenses are
consistent within 2%.
General and administrative expenses for the quarter were slightly higher
than 2006 by 2% but year to date the expenses are down by 9%. Cost control
within this area has been a main focus for the Company and will continue to be
as expansion plans are developed and initiated.
Research and development expenses decreased to $90,000 in the quarter
versus $173,000 in the previous year's period. The Company continues its
capitalization of development costs for the SmartBall(R) leak detection
system, the major contributor to the decrease. This also accounts for the year
to date decrease of 48% compared to 2006.
Depreciation and amortization for the third quarter of 2007 fell by 27%
compared to $224,000 for the same period in 2006 as several large additions
from previous years were fully depreciated within the quarter. Year to date,
it has increased by $8,905.
Overall for both the third quarter and year to date in 2007, operating
expenses have decreased compared to 2006. Interest income has risen in the
quarter and year to date as the proceeds from the equity financing were
invested in short term liquid assets.
The Company s cash balance at September 30, 2007 was $16,162,000 compared
to $4,297,000 at December 31, 2006. The Company had $20,260,000 of working
capital as at September 30, 2007 compared to $8,161,000 at December 31, 2006.
This increase in cash and working capital is attributable to the completion of
an equity financing on April 30, 2007. The financing (net of all costs)
contributed $13,792,000 to cash. These proceeds have been allocated to
accelerate the commercialization of the SmartBall(R) leak detection
technology, to enhance our marketing efforts worldwide, and to enable the
development of new technologies, largely accounting for the decrease of
$960,000 in cash and cash equivalents over the last quarter.
2007 Q3 Financial Highlights
Consolidated Statement Three months ended: Nine months ended:
of Operations September September September September
30, 2007 30, 2006 30, 2007 30, 2006
-------------------------------------------------------------------------
Product sales revenue $ 1,835,000 $ 1,593,000 $ 5,372,000 $ 4,810,000
Monitoring &amp;
technical support 336,000 382,000 928,000 1,011,000
------------ ------------ ------------ ------------
Total revenue 2,171,000 1,975,000 6,300,000 5,821,000
Cost of sales 930,000 832,000 2,228,000 2,669,000
Marketing 345,000 326,000 1,108,000 1,128,000
General and
administrative 942,000 924,000 2,625,000 2,899,000
Research and
development 90,000 173,000 284,000 550,000
Depreciation and
amortization 163,000 224,000 565,000 574,000
Foreign exchange loss (27,000) 25,000 179,000 101,000
Interest income (133,000) (29,000) (290,000) (90,000)
------------ ------------ ------------ ------------
Net loss from
continued operations (139,000) (500,000) (399,000) (2,010,000)
Loss on discontinued
operations (200,000) (234,000) (970,000) (1,096,000)
------------ ------------ ------------ ------------
Net loss (339,000) (734,000) (1,369,000) (3,106,000)
Loss per share -
basic and diluted $ (0.01) $ (0.03) $ (0.05) $ (0.15)
Weighted avg. shares
- basic and diluted 31,609,084 21,820,810 28,107,963 20,813,786
Consolidated Balance Sheet
As at As at
Sept. 30, Dec. 31,
2007 2006
-------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $16,162,000 $ 4,297,000
Accounts receivable 3,224,000 3,565,000
Contracts in progress 52,000 77,000
Inventory 713,000 421,000
Prepaid expenses 455,000 256,000
Net investment in lease 81,000 93,000
Current assets - discontinued operations 333,000 540,000
--------------------------
21,020,000 9,249,000
Property and equipment 2,585,000 2,104,000
Intangible assets 551,000 500,000
Net investment in lease 188,000 282,000
Other assets 51,000 74,000
Non-current assets - discontinued operations 1,444,000 1,295,000
--------------------------
$25,839,000 $13,504,000
Liabilities and Equity
Current liabilities
Accounts payable $ 625,000 $ 862,000
Deposits on sales contracts 70,000 123,000
Current liabilities - discontinued
operations 65,000 103,000
--------------------------
760,000 1,088,000
Shareholders equity Share capital 41,268,000 27,703,000
Contributed surplus 661,000 507,000
Warrants 361,000 49,000
Deficit (17,211,000) (15,843,000)
--------------------------
$25,839,000 $13,504,000
About Pure Technologies Ltd.
Pure Technologies is an international technology company which has
developed patented and proprietary technologies for management and
surveillance of critical infrastructure around the world. Applications for
these technologies include water and wastewater pipelines, bridges, oil and
gas pipelines, transportation infrastructure, high-rise buildings, parking and
other critical structures. Pure provides its technologies from its
headquarters in Calgary, Canada and subsidiaries in Maryland and New Jersey.
Forward-Looking Statements
This release contains forward-looking statements. Forward-looking
statements, without limitation, may contain the words "believes", "expects",
"anticipates", "estimates", "intends", "plans", or similar expressions.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions and the Company's actual results
could differ materially from those anticipated. Forward-looking statements are
based on the opinions and estimates of Management at the date the statements
are made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking statements. In the context of any
forward-looking information please refer to risk factors detailed in, as well
as other information contained in, the Company's filings with Securities
Regulators (www.sedar.com).
(R) Registered Trademarks, property of Pure Technologies Ltd.
(TM) Trademark, property of Pure Technologies Ltd.
"The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release"
%SEDAR: 00006060E

For further information:

For further information: visit our website at
www.puretechnologiesltd.com; Or contact James E. Paulson, Chairman, or Karen
Keebler, Chief Financial Officer, at (403) 266-6794 or e-mail to
info@puretechnologiesltd.com